Buying a New Car

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A new car is second only to a home as the most expensive purchase many consumers make. According to the National Automobile Dealers Association, the average price of a new car sold in the United States as of 2007 was $28,400.¹ That's why it's important to know how to make a smart deal.

Think about what car model and options you want and how much you're willing to spend. Do some research and you'll be less likely to feel pressured into making a hasty or expensive decision at the showroom, and more likely to get a better deal.

Consider these suggestions:

• Check publications at a library or bookstore, or on the Internet, which discuss new car features and prices. These may provide information on the dealer's costs for specific models and options.
• Shop around to get the best possible price by comparing models and prices in ads and at dealer showrooms. You also may want to contact car-buying services and broker-buying services to make comparisons. Provident Credit Union offers these services on its Online Auto Shopping site through its partner, AutoLand.
• Plan to negotiate on price. Dealers may be willing to bargain on their profit margin, often between 10 and 20 percent. Usually, this is the difference between the manufacturer's suggested retail price (MSRP) and the invoice price.
• Because the price is a factor in the dealer's calculations regardless of whether you pay cash or finance your car -- and also affects your monthly payments -- negotiating the price can save you money.
• Consider ordering your new car if you don't see what you want on the dealer's lot. This may involve a delay, but cars on the lot may have options you don't want -- and that can raise the price. However, dealers often want to sell their current inventory quickly, so you may be able to negotiate a good deal if an in-stock car meets your needs.

Learning the Terms

Negotiations often have a vocabulary of their own. Check out our Glossary of Terms you may hear when you're talking price.